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EXHIBIT 1.1
$125,000,000
KCS ENERGY, INC.
% Senior Subordinated Notes due 2008
UNDERWRITING AGREEMENT
________, 1998
SALOMON BROTHERS INC
PRUDENTIAL SECURITIES INC.
CIBC XXXXXXXXXXX CORP.
XXXXXXXXX AND COMPANY, INC.
XXXXXX XXXXXX & COMPANY, INC.
As Representatives of the Several Underwriters
c/o SALOMON BROTHERS INC
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
KCS Energy, Inc., a Delaware corporation (the "Company"), proposes,
upon the terms and conditions set forth herein, to issue and sell $125,000,000
aggregate principal amount of its % Senior Subordinated Notes due 2008 (the
"Notes") to the several Underwriters named in Schedule I hereto (the
"Underwriters"). The Notes will be issued pursuant to the provisions of an
Indenture to be dated as of , 1998 (the "Indenture"),
between the Company, the Guarantors (as defined herein) and State Street Bank
and Trust Company, as Trustee (the "Trustee").
Initially, the Notes will be guaranteed (the "Guarantees" and,
together with the Notes, the "Securities") on a senior unsecured basis by
Enercorp Gas Marketing, Inc., KCS Resources, Inc., KCS Michigan Resources,
Inc., KCS Pipeline Systems, Inc., KCS Energy Marketing, Inc., KCS Energy
Services, Inc., KCS Medallion Resources Inc., National Enerdrill Corporation,
Proliq, Inc. Medallion California Properties Co. and Medallion Gas Services,
Inc. (collectively, the "Guarantors" and, together with the Company, the
"Issuers").
The Issuers wish to confirm as follows their agreement with you (the
"Representatives") and the other several Underwriters on whose behalf you are
acting, in connection with the several purchases of the Notes by the
Underwriters.
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1. Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement on Form S-3 under the Act
(the "registration statement"), including a prospectus subject to completion
relating to the Notes. The term "Registration Statement" as used in this
Agreement means the registration statement (including all financial schedules
and exhibits), as amended at the time it becomes effective, or, if the
registration statement became effective prior to the execution of this
Agreement, as supplemented or amended prior to the execution of this Agreement.
If it is contemplated, at the time this Agreement is executed, that a
post-effective amendment to the registration statement will be filed and must
be declared effective before the offering of the Notes may commence, the term
"Registration Statement" as used in this Agreement means the registration
statement as amended by said post-effective amendment. The term "Prospectus"
as used in this Agreement means the prospectus in the form included in the
Registration Statement, or, if the prospectus included in the Registration
Statement omits information in reliance on Rule 430A under the Act and such
information is included in a prospectus filed with the Commission pursuant to
Rule 424(b) under the Act, the term "Prospectus" as used in this Agreement
means the prospectus in the form included in the Registration Statement as
supplemented by the addition of the Rule 430A information contained in the
prospectus filed with the Commission pursuant to Rule 424(b). The term
"Prepricing Prospectus" as used in this Agreement means the prospectus subject
to completion in the form included in the registration statement at the time of
the initial filing of the registration statement with the Commission, and as
such prospectus shall have been amended from time to time prior to the date of
the Prospectus. Any reference in this Agreement to the registration statement,
the Registration Statement, any Prepricing Prospectus or the Prospectus shall
be deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Act, as of the date of the
registration statement, the Registration Statement, such Prepricing Prospectus
or the Prospectus, as the case may be, and any reference to any amendment or
supplement to the registration statement, the Registration Statement, any
Prepricing Prospectus or the Prospectus shall be deemed to refer to and include
any documents filed after such date under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") which, upon filing, are incorporated by
reference therein, as required by paragraph (b) of Item 12 of Form S-3. As
used herein, the term "Incorporated Documents" means the documents which at the
time are incorporated by reference in the registration statement, the
Registration Statement, any Prepricing Prospectus, the Prospectus, or any
amendment or supplement thereto.
2. Agreements to Sell and Purchase. The Issuers hereby agree,
subject to all the terms and conditions set forth herein, to issue and sell to
each Underwriter and, upon the basis of the representations, warranties and
agreements of the Issuers herein contained and subject to all the terms and
conditions set forth herein, each Underwriter agrees, severally and not
jointly, to purchase from the Issuers, at a purchase price of % of the
principal amount thereof, the principal amount of Notes (together with the
Guarantees) set forth opposite the name of such Underwriter in Schedule I
hereto (or such principal amount of Notes increased as set forth in Section 10
hereof).
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3. Terms of Public Offering. The Issuers have been advised by
you that the Underwriters propose to make a public offering of their respective
portions of the Notes as soon after the Registration Statement and this
Agreement have become effective as in your judgment is advisable and initially
to offer the Notes upon the terms set forth in the Prospectus.
4. Delivery of the Notes and Payment Therefor. Delivery to the
Underwriters of and payment for the Notes shall be made at the office of Xxxxx
Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, at 10:00 A.M., New York
City time, on , 1997 (the "Closing Date"). The place of closing for
the Notes and the Closing Date may be varied by agreement between you and the
Issuers.
The Notes will be delivered to you for the accounts of the several
Underwriters against payment of the purchase price therefor by wire transfer in
same-day funds. The Notes will be evidenced by a single global security in
definitive form (the "Global Security") and/or by additional certificated
securities, and will be registered, in the case of a Global Security, in the
name of Cede & Co. as nominee of The Depository Trust Company ("DTC"), and in
the other cases, in such names and in such denominations as you shall request
prior to 9:30 A.M., New York City time, on the second business day preceding
the Closing Date. The Notes to be delivered to the Underwriters shall be made
available to you in New York City for inspection and packaging not later than
9:30 A.M., New York City time, on the business day next preceding the Closing
Date.
5. Agreements of the Issuers. The Issuers agree with the several
Underwriters as follows:
(a) If, at the time this Agreement is executed and
delivered, it is necessary for the Registration Statement or a post-effective
amendment thereto to be declared effective before the offering of the Notes may
commence, the Issuers will endeavor to cause the Registration Statement or such
post-effective amendment to become effective as soon as possible and will
advise you promptly and, if requested by you, will confirm such advice in
writing, when the Registration Statement or such post-effective amendment has
become effective.
(b) The Issuers will advise you promptly and, if
requested by you, will confirm such advice in writing: (i) of any request by
the Commission for amendment of or a supplement to the Registration Statement,
any Prepricing Prospectus or the Prospectus or for additional information; (ii)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the suspension of
qualification of the Notes for offering or sale in any jurisdiction or the
initiation of any proceeding for such purpose; and (iii) within the period of
time referred to in paragraph (f) below, of any change in the Company's
condition (financial or other), business, prospects, properties, net worth or
results of operations, or of the happening of any event, which makes any
statement of a material fact made in the Registration Statement or the
Prospectus (as then amended or supplemented) untrue or which requires the
making of any additions to or changes in the Registration Statement or the
Prospectus (as then amended or supplemented) in order to state a material fact
required by the Act or the regulations thereunder to be stated therein or
necessary in order to make the statements therein not misleading, or of the
necessity to amend or
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supplement the Prospectus (as then amended or supplemented) to comply with the
Act or any other law. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, the Issuers will
make every reasonable effort to obtain the withdrawal of such order at the
earliest possible time.
(c) The Issuers will furnish to you, without charge (i)
six signed copies of the registration statement as originally filed with the
Commission and of each amendment thereto, including financial statements and
all exhibits to the registration statement, (ii) such number of conformed
copies of the registration statement as originally filed and of each amendment
thereto, but without exhibits, as you may request, (iii) such number of copies
of the Indenture and of the Incorporated Documents, without exhibits, as you
may request, and (iv) six copies of the exhibits to the Incorporated Documents.
(d) The Issuers will not file any amendment to the
Registration Statement or make any amendment or supplement to the Prospectus
or, prior to the end of the period of time referred to in the first sentence in
subsection (f) below, file any document which, upon filing becomes an
Incorporated Document, of which you shall not previously have been advised or
to which, after you shall have received a copy of the document proposed to be
filed, you shall reasonably object.
(e) Prior to the execution and delivery of this
Agreement, the Issuers have delivered to you, without charge, in such
quantities as you have requested, copies of each form of the Prepricing
Prospectus. The Issuers consent to the use, in accordance with the provisions
of the Act and with the securities or Blue Sky laws of the jurisdictions in
which the Notes are offered by the several Underwriters and by dealers, prior
to the date of the Prospectus, of each Prepricing Prospectus so furnished by
the Issuers.
(f) As soon after the execution and delivery of this
Agreement as possible and thereafter from time to time for such period as in
the opinion of counsel for the Underwriters a prospectus is required by the Act
to be delivered in connection with sales by any Underwriter or dealer, the
Issuers will expeditiously deliver to each Underwriter and each dealer, without
charge, as many copies of the Prospectus (and of any amendment or supplement
thereto) as you may request. The Issuers consent to the use of the Prospectus
(and of any amendment or supplement thereto) in accordance with the provisions
of the Act and with the securities or Blue Sky laws of the jurisdictions in
which the Notes are offered by the several Underwriters and by all dealers to
whom Notes may be sold, both in connection with the offering and sale of the
Notes and for such period of time thereafter as the Prospectus is required by
the Act to be delivered in connection with sales by any Underwriter or dealer.
If during such period of time any event shall occur that in the judgment of the
Issuers or in the opinion of counsel for the Underwriters is required to be set
forth in the Prospectus (as then amended or supplemented) or should be set
forth therein in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
to supplement or amend the Prospectus (or to file under the Exchange Act any
document which, upon filing, becomes an Incorporated Document) in order to
comply with the Act or any other law, the Issuers will forthwith prepare and,
subject to the provisions of paragraph (d) above, file with the Commission an
appropriate supplement or amendment thereto (or to such
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document), and will expeditiously furnish to the Underwriters and dealers a
reasonable number of copies thereof. In the event that the Issuers and you, as
Representatives of the several Underwriters, agree that the Prospectus should
be amended or supplemented, the Issuers, if requested by you, will promptly
issue a press release announcing or disclosing the matters to be covered by the
proposed amendment or supplement.
(g) The Issuers will cooperate with you and with counsel
for the Underwriters in connection with the registration or qualification of
the Notes for offering and sale by the several Underwriters and by dealers
under the securities or Blue Sky laws of such jurisdictions as you may
designate and will file such consents to service of process or other documents
necessary or appropriate in order to effect such registration or qualification;
provided that in no event shall the Issuers be obligated to qualify to do
business in any jurisdiction where they are not now so qualified or to take any
action which would subject them to service of process in suits, other than
those arising out of the offering or sale of the Notes, in any jurisdiction
where they are not now so subject.
(h) The Company will make generally available to its
security holders a consolidated earnings statement, which need not be audited,
covering a twelve-month period commencing after the effective date of the
Registration Statement and ending not later than 15 months thereafter, as soon
as practicable after the end of such period, which consolidated earnings
statement shall satisfy the provisions of Section ll(a) of the Act.
(i) So long as any of the Notes are outstanding, the
Issuers will furnish to you (i) as soon as available, a copy of each report of
the Company mailed to stockholders or filed with the Commission, and (ii) from
time to time such other information concerning the Company as you may request.
(j) If this Agreement shall terminate or shall be
terminated after execution pursuant to any provision hereof (otherwise than
pursuant to the second paragraph of Section 10 hereof or by notice given by you
terminating this Agreement pursuant to Section 10 or Section 11 hereof) or if
this Agreement shall be terminated by the Underwriters because of any failure
or refusal on the part of the Issuers to comply with the terms or fulfill any
of the conditions of this Agreement, the Issuers agree to reimburse the
Representatives for all out-of-pocket expenses (including fees and expenses of
counsel for the Underwriters) incurred by you in connection herewith.
(k) The Issuers will apply the net proceeds from the sale
of the Notes substantially in accordance with the description set forth in the
Prospectus.
(l) If Rule 430A of the Act is employed, the Issuers will
timely file the Prospectus pursuant to Rule 424(b) under the Act and will
advise you of the time and manner of such filing.
(m) Except as provided in this Agreement, the Company
will not sell, contract to sell or otherwise dispose of any Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock, or
grant any options or warrants to purchase Common Stock, for
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a period of 90 days after the date of the Prospectus, without the prior written
consent of Xxxxx Xxxxxx Inc.; provided, however, that the Company may issue and
sell common stock pursuant to any employee stock option or other benefit or
incentive plans maintained for the Company's officers, directors or employees
in effect as of the date of this Agreement, and the Company may issue up to
870,000 shares of Common Stock upon exercise of warrants issued in the
Medallion Acquisition (as defined in the Registration Statement).
(n) The Company has furnished or will furnish to you
"lock-up" letters, in form and substance satisfactory to you, signed by each of
its current officers and directors and each of its stockholders designated by
you.
(o) Except as stated in this Agreement and in the
Prepricing Prospectus and Prospectus, the Issuers have not taken, nor will they
take, directly or indirectly, any action designed to or that might reasonably
be expected to cause or result in stabilization or manipulation of the price of
the Notes to facilitate the sale or resale of the Notes.
(p) The Company will use its best efforts: to have the
Notes listed on the New York Stock Exchange concurrently with the effectiveness
of the registration statement.
6. Representations and Warranties of the Issuers. The Issuers,
jointly and severally, represent and warrant to each Underwriter that:
(a) Each Prepricing Prospectus included as part of the
registration statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 under the Act, complied when
so filed in all material respects with the provisions of the Act. The
Commission has not issued any order preventing or suspending the use of any
Prepricing Prospectus.
(b) The Company and the transactions contemplated by this
Agreement meet the requirements for using Form S-3 under the Act. The
registration statement in the form in which it became or becomes effective and
also in such form as it may be when any post-effective amendment thereto shall
become effective and the prospectus and any supplement or amendment thereto
when filed with the Commission under Rule 424(b) under the Act, complied or
will comply in all material respects with the provisions of the Act and will
not at any such times contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, except that this representation and warranty
does not apply to statements in or omissions from the registration statement or
the prospectus made in reliance upon and in conformity with (i) information
relating to any Underwriter furnished to the Company in writing by or on behalf
of any Underwriter through you expressly for use therein, or (ii) the Trustee's
Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture
Act of 1939, as amended (the "1939 Act").
(c) The Incorporated Documents heretofore filed, when
they were filed (or, if any amendment with respect to any such document was
filed, when such amendment was filed), conformed in all material respects with
the requirements of the Exchange Act and the rules and
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regulations thereunder, any further Incorporated Documents so filed will, when
they are filed, conform in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder; no such document when it
was filed (or, if an amendment with respect to any such document was filed,
when such amendment was filed), contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading; and no such
further document, when it is filed, will contain an untrue statement of a
material fact or will omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading.
(d) The Indenture has been duly and validly authorized
and, upon its execution and delivery by each of the Issuers and assuming due
execution and delivery by the Trustee, will be a valid and binding agreement of
each of the Issuers, enforceable in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency or other similar
laws affecting creditors' rights generally, and has been (or will have been)
duly qualified under the 1939 Act and conforms to the description thereof in
the Registration Statement and the Prospectus.
(e) The Notes and Guarantees have been duly authorized by
the Company and each of the Guarantors, respectively, and, when executed by the
Company and each of the Guarantors, respectively, and, in the case of the
Notes, authenticated by the Trustee in accordance with the Indenture and
delivered to you against payment therefor in accordance with the terms hereof,
will have been validly issued and delivered, and will constitute valid and
binding obligations of the Company and each of the Guarantors, respectively,
entitled to the benefits of the Indenture and enforceable in accordance with
their terms, except as enforcement thereof may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
generally, and the Notes will conform to the description thereof in the
Registration Statement and the Prospectus.
(f) All the outstanding shares of capital stock of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable and are free of any preemptive or similar rights.
(g) The Company is a corporation duly organized and
validly existing in good standing under the laws of the State of Delaware with
full corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement and the
Prospectus, and is duly registered and qualified to conduct its business and is
in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify does not have
a material adverse effect on the condition (financial or other), business,
properties, net worth or results of operations of the Company and the
Subsidiaries (as hereinafter defined) taken as a whole (a "Material Adverse
Effect").
(h) All the Company's subsidiaries (collectively, the
"Subsidiaries") are listed in an exhibit to the Company's Annual Report on Form
10-K which is incorporated by reference into the Registration Statement. Each
Subsidiary is a corporation duly organized, validly existing and
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in good standing in the jurisdiction of its incorporation, with full corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectus, and is
duly registered and qualified to conduct its business and is in good standing
in each jurisdiction or place where the nature of its properties or the conduct
of its business requires such registration or qualification, except where the
failure so to register or qualify does not have a material adverse effect on
the condition (financial or other), business, properties, net worth or results
of operations of such Subsidiary; all the outstanding shares of capital stock
of each of the Subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable, and are owned by the Company directly, or
indirectly through one of the other Subsidiaries, free and clear of any lien,
adverse claim, security interest, equity or other encumbrance, except as
described in the Registration Statement and except for restrictions on
transferability imposed by the Act or applicable state securities or Blue Sky
laws.
(i) There are no legal or governmental proceedings
pending or, to the knowledge of the Company, threatened, against the Company or
any of the Subsidiaries, or to which the Company or any of the Subsidiaries, or
to which any of their respective properties is subject, that are required to be
described in the Registration Statement or the Prospectus but are not described
as required, and there are no agreements, contracts, indentures, leases or
other instruments that are required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the Registration
Statement or any Incorporated Document that are not described or filed as
required by the Act or the Exchange Act.
(j) Neither the Company nor any of the Subsidiaries is in
violation of its certificate or articles of incorporation or by-laws, or other
organizational documents, or of any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or any of the
Subsidiaries or of any decree of any court or governmental agency or body
having jurisdiction over the Company or any of the Subsidiaries, except where
any such violation or violations in the aggregate would not have a Material
Adverse Effect, or in default in any material respect in the performance of any
obligation, agreement or condition contained in any bond, debenture, note or
any other evidence of indebtedness or in any material agreement, indenture,
lease or other instrument to which the Company or any of the Subsidiaries is a
party or by which any of them or any of their respective properties may be
bound, except where such default would not have a Material Adverse Effect.
(k) Neither the issuance and sale of the Notes, the
execution, delivery or performance of this Agreement or the Indenture by the
Issuers, nor the consummation by the Issuers of the transactions contemplated
hereby and thereby (i) requires any consent, approval, authorization or other
order of or registration or filing with, any court, regulatory body,
administrative agency or other governmental body, agency or official (except
such as may be required for the registration of the Notes under the Act and the
Exchange Act, qualification of the Indenture under the 1939 Act, and compliance
with the securities or Blue Sky laws of various jurisdictions, all of which
have been or will be effected in accordance with this Agreement) or conflicts
or will
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conflict with or constitutes or will constitute a breach of, or a default
under, the certificate or articles of incorporation or bylaws, or other
organizational documents, of the Company or any of the Subsidiaries or (ii)
conflicts or will conflict with or constitutes or will constitute a breach of,
or a default under, any material agreement, indenture, lease or other
instrument to which the Company or any of the Subsidiaries is a party or by
which any of them or any of their respective properties may be bound, or (iii)
violates or will violate in any material respect any statute, law, regulation
or filing or judgment, injunction, order or decree applicable to the Company or
any of the Subsidiaries or any of their respective properties, or (iv) will
result in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any of the Subsidiaries pursuant to
the terms of any agreement or instrument to which any of them is a party or by
which any of them may be bound or to which any of the property or assets of any
of them is subject.
(l) The accountants, Xxxxxx Xxxxxxxx LLP, who have
certified or shall certify the financial statements included or incorporated by
reference in the Registration Statement and the Prospectus (or any amendment or
supplement thereto) are independent public accountants as required by the Act.
(m) The consolidated financial statements, together with
related schedules and notes, included or incorporated by reference in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto), present fairly the consolidated financial position, results of
operations and changes in financial position of the Company and the
Subsidiaries on the basis stated in the Registration Statement at the
respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved, except as disclosed therein; and the other financial and
statistical information and data included or incorporated by reference in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto) are accurately presented and, to the extent such information is
derived from the financial books and records of the Company, are prepared on a
basis consistent with such financial statements and the books and records of
the Company and the Subsidiaries.
(n) The execution and delivery of, and the performance by
each of the Company and the Guarantors of its obligations under, this Agreement
have been duly and validly authorized by each of the Company and the
Guarantors, and this Agreement has been duly executed and delivered by the
Company and the Guarantors and constitutes the valid and legally binding
agreement of the Company and the Guarantors, enforceable against each of the
Company and the Guarantors in accordance with its terms, except as rights to
indemnity and contribution hereunder may be limited by federal or state
securities laws and except as the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and subject to the applicability of
general principles of equity.
(o) Except as disclosed in the Registration Statement and
the Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement thereto), neither
the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any transaction, not in the
ordinary course of business, that is material to the Company and the
Subsidiaries taken as a whole, and there has not been any change in the
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capital stock, or material increase in the short-term debt or long-term debt,
of the Company or any of the Subsidiaries, or any material adverse change, or
any development involving or which may reasonably be expected to involve, a
prospective material adverse change, in the condition (financial or other),
business, net worth or results of operations of the Company and the
Subsidiaries taken as a whole.
(p) Each of the Company and the Subsidiaries has good and
indefeasible title to all of its real property (and good and marketable title
to all personal property) described in the Prospectus as being owned by it,
free and clear of all liens, claims, security interests or other encumbrances
except such as are described in the Registration Statement and the Prospectus
or in a document filed as an exhibit to the Registration Statement or except
such as would not have a Material Adverse Effect and all the property described
in the Prospectus as being held under lease by each of the Company and the
Subsidiaries is held by it under valid, subsisting and enforceable leases,
except such as would not have a Material Adverse Effect.
(q) The Company has not distributed and, prior to the
later to occur of (i) the Closing Date and (ii) completion of the distribution
of the Notes, will not distribute any offering material in connection with the
offering and sale of the Notes other than the Registration Statement, the
Prepricing Prospectus, the Prospectus or other materials, if any, permitted by
the Act.
(r) The Company and each of the Subsidiaries has such
permits, licenses, franchises and authorizations of governmental or regulatory
authorities ("permits") as are necessary to own its respective properties and
to conduct its business in the manner described in the Prospectus, subject to
such qualifications as may be set forth in the Prospectus except to the extent
the failure to have any such permits would not have a Material Adverse Effect;
the Company and each of the Subsidiaries has fulfilled and performed all its
material obligations with respect to such permits and no event has occurred
which allows, or after notice or lapse of time would allow, revocation or
termination thereof or results in any other material impairment of the rights
of the holder of any such permit, except to the extent that any such revocation
or termination would not have a Material Adverse Effect, and subject in each
case to such qualification as may be set forth in the Prospectus; and, except
as described in the Prospectus, none of such permits contains any restriction
that is materially burdensome to the Company and its Subsidiaries taken as a
whole.
(s) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(t) To the Company's knowledge, neither the Company nor
any of its Subsidiaries nor any employee or agent of the Company or any
Subsidiary has made any payment of funds of the Company or any Subsidiary or
received or retained any funds in violation of any law, rule or
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regulation, which payment, receipt or retention of funds is of a character
required to be disclosed in the Prospectus.
(u) The Company and each of the Subsidiaries have filed
all tax returns required to be filed, which returns are complete and correct,
and neither the Company nor any Subsidiary is in default in the payment of any
taxes which were payable pursuant to said returns or any assessments with
respect thereto except where the failure to file such returns and make such
payments would not have a Material Adverse Effect.
(v) Except for any rights described in the Prospectus
which have been waived, no holder of any security of the Company has any right
to require registration of shares of Common Stock or any other security of the
Company because of the filing of the registration statement or consummation of
the transactions contemplated by this Agreement.
(w) The Company and the Subsidiaries own all patents,
trademarks, trademark registrations, service marks, service xxxx registrations,
trade names, copyrights, licenses, inventions, trade secrets and rights
described in the Prospectus as being owned by them or any of them or necessary
for the conduct of their respective businesses, and the Company is not aware of
any claim to the contrary or any challenge by any other person to the rights of
the Company and the Subsidiaries with respect to the foregoing.
(x) The Company is not and, upon sale of the Notes to be
issued and sold thereby in accordance herewith and the application of the net
proceeds to the Company of such sale as described in the Prospectus under the
caption "Use of Proceeds," will not be an "investment company" within the
meaning of the Investment Company Act of 1940, as amended (the "1940 Act").
(y) The Company and the Subsidiaries are in compliance
with, and not subject to any liability under, the common law and all applicable
federal, state, local and foreign laws, regulations, rules, codes, ordinances,
directives, and orders relating to pollution or to protection of public or
employee health or safety or to the environment, including, without limitation,
those that relate to any Hazardous Material (as defined herein) ("Environmental
Laws"), except, in each case, where noncompliance or liability, individually or
in the aggregate, would not have a Material Adverse Effect. The term
"Hazardous Material" means any pollutant, contaminant or waste, or any
hazardous, dangerous, or toxic chemical, material, waste, substance or
constituent subject to regulation under any Environmental Law.
(z) Neither the Company nor any of its Subsidiaries is a
"holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended ("PUHCA").
7. Indemnification and Contribution. (a) Each of the Issuers,
jointly and severally, agrees to indemnify and hold harmless each of you and
each other Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the
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Exchange Act from and against any and all losses, claims, damages, liabilities
and expenses (including reasonable costs of investigation) arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in any Prepricing Prospectus or in the Registration Statement or the
Prospectus or in any amendment or supplement thereto, or arising out of or
based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which has been made therein or omitted
therefrom in reliance upon and in conformity with the information relating to
such Underwriter furnished in writing to the Company by or on behalf of any
Underwriter through you expressly for use in connection therewith; provided,
however, that the indemnification contained in this paragraph (a) with respect
to any Prepricing Prospectus shall not inure to the benefit of any Underwriter
(or to the benefit of any person controlling such Underwriter) on account of
any such loss, claim, damage, liability or expense arising from the sale of the
Notes by such Underwriter to any person if a copy of the Prospectus shall not
have been delivered or sent to such person within the time required by the Act
and the regulations thereunder, and the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in such
Prepricing Prospectus was corrected in the Prospectus, unless such failure is
the result of the failure by the Company to comply with Section 5(f) hereof.
The foregoing indemnity agreement shall be in addition to any liability which
the Company may otherwise have.
(b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Issuers, such Underwriter or such
controlling person shall promptly notify the Issuers and the Issuers shall
assume the defense thereof, including the employment of counsel and payment of
all fees and expenses. Such Underwriter or any such controlling person shall
have the right to employ separate counsel in any such action, suit or
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Underwriter or such controlling
person unless (i) the Issuers have agreed in writing to pay such fees and
expenses, (ii) the Issuers have failed to assume the defense and employ
counsel, or (iii) the named parties to any such action, suit or proceeding
(including any impleaded parties) include both such Underwriter or such
controlling person and the Issuers and such Underwriter or such controlling
person shall have been advised by its counsel that representation of such
indemnified party and the Issuers by the same counsel would be inappropriate
under applicable standards of professional conduct (whether or not such
representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the Issuers shall not
have the right to assume the defense of such action, suit or proceeding on
behalf of such Underwriter or such controlling person). It is understood,
however, that the Issuers shall, in connection with any one such action, suit
or proceeding or separate but substantially similar or related actions, suits
or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
only one separate firm of attorneys (in addition to any local counsel) at any
time for all such Underwriters and controlling persons not having actual or
potential differing interests with you or among themselves, which firm shall be
designated in writing by Xxxxx Xxxxxx Inc., and that all such fees and expenses
shall be reimbursed as they are incurred. The Issuers shall
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not be liable for any settlement of any such action, suit or proceeding
effected without its written consent, but if settled with such written consent,
or if there be a final judgment for the plaintiff in any such action, suit or
proceeding, the Issuers agree to indemnify and hold harmless any Underwriter,
to the extent provided in the preceding paragraph, and any such controlling
person from and against any loss, claim, damage, liability or expense by reason
of such settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Issuers, their directors, their officers who
sign the Registration Statement, and any person who controls an Issuer within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the
same extent as the foregoing indemnity from the Issuers to each Underwriter,
but only with respect to information relating to such Underwriter furnished in
writing by or on behalf of such Underwriter through you expressly for use in
the Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto. If any action, suit or proceeding shall be
brought against the Issuers, any of their directors, any such officer, or any
such controlling person, based on the Registration Statement, the Prospectus or
any Prepricing Prospectus, or any amendment or supplement thereto, and in
respect of which indemnity may be sought against any Underwriter pursuant to
this paragraph (c), such Underwriter shall have the rights and duties given to
the Issuers by paragraph (b) above (except that if the Issuers shall have
assumed the defense thereof such Underwriter shall not be required to do so,
but may employ separate counsel therein and participate in the defense thereof,
but the fees and expenses of such counsel shall be at such Underwriter's
expense), and the Issuers, their directors, any such officer, and any such
controlling person, shall have the rights and duties given to the Underwriters
by paragraph (b) above. The foregoing indemnity agreement shall be in addition
to any liability which the Underwriters may otherwise have.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Issuers on the one hand and the Underwriters on the other hand from the
offering of the Notes, or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Issuers on the one hand and the Underwriters on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Issuers on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Issuers bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault of the Issuers
on the one hand and the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the
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Issuers on the one hand or by the Underwriters on the other hand and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
(e) The Issuers and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined
by a pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in paragraph (d) above
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 7, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price of the Notes underwritten by it and distributed to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to
this Section 7 are several in proportion to the respective principal amounts of
Notes set forth opposite their names in Schedule I hereto (or such principal
amounts of Notes increased as set forth in Section 10 hereof) and not joint.
(f) No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which
an indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Issuers set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Issuers, their respective directors or officers or any
person controlling the Issuers, (ii) acceptance of any Notes and payment
therefor hereunder, and (iii) any termination of this Agreement. A successor
to any Underwriter or any person controlling any Underwriter, or to an Issuer,
their respective directors or officers, or any person controlling an Issuer,
shall be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 7.
8. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Notes hereunder are subject to
the following conditions:
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(a) If, at the time this Agreement is executed and
delivered, it is necessary for the registration statement or a post-effective
amendment thereto to be declared effective before the offering of the Notes may
commence, the registration statement or such post-effective amendment shall
have become effective not later than 5:30 P.M., New York City time, on the date
hereof, or at such later date and time as shall be consented to in writing by
you, and all filings, if any, required by Rules 424 and 430A under the Act
shall be timely made; no stop order suspending the effectiveness of the
registration statement shall have been issued and no proceeding for that
purpose shall have been instituted or, to the knowledge of the Issuers or any
Underwriter, threatened by the Commission, and any request of the Commission
for additional information (to be included in the registration statement or the
prospectus or otherwise) shall have been complied with to your satisfaction.
(b) Subsequent to the effective date of this Agreement,
there shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
business, properties, net worth, or results of operations of the Company or the
Subsidiaries not contemplated by the Prospectus, which in your opinion, as
Representatives of the several Underwriters, would materially adversely affect
the market for the Notes, or (ii) any event or development relating to or
involving the Company or any officer or director of the Company which makes any
statement made in the Prospectus materially untrue or which, in the opinion of
the Company and its counsel or the Underwriters and their counsel, requires the
making of any addition to or change in the Prospectus in order to state a
material fact required by the Act or any other law to be stated therein or
necessary in order to make the statements therein not misleading, if amending
or supplementing the Prospectus to reflect such event or development would, in
your opinion, as Representatives of the several Underwriters, materially
adversely affect the market for the Notes.
(c) You shall have received on the Closing Date, an
opinion of Mayor, Day, Xxxxxxxx & Xxxxxx, L.L.P., counsel for the Company,
dated the Closing Date and addressed to you, as Representatives of the several
Underwriters, to the effect that:
(i) The Company is a corporation duly
incorporated and validly existing in good standing under the laws of the State
of Delaware with full corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Registration
Statement and the Prospectus (and any amendment or supplement thereto), and is
duly registered and qualified to conduct its business and is in good standing
in each jurisdiction or place where the nature of its properties or the conduct
of its business requires such registration or qualification, except where the
failure so to register or qualify does not have a Material Adverse Effect;
(ii) Each Guarantor is a corporation duly
organized and validly existing in good standing under the laws of the
jurisdiction of its organization, with full corporate power and authority to
own, lease, and operate its properties and to conduct its business as described
in the Registration Statement and the Prospectus (and any amendment or
supplement thereto); and all the outstanding shares of capital stock of each of
the Guarantors have been duly authorized and validly issued, are fully paid and
nonassessable, and are owned by the Company directly, or indirectly
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through one of the other Subsidiaries, free and clear of any perfected security
interest, or, to the best knowledge of such counsel after reasonable inquiry,
any other security interest, lien, adverse claim, equity or other encumbrance;
(iii) The authorized and outstanding capital stock
of the Company is as set forth under the caption "Capitalization" in the
Prospectus;
(iv) All the shares of capital stock of the
Company outstanding prior to the issuance of the Notes have been duly
authorized and validly issued, and are fully paid and nonassessable;
(v) The Company and the Guarantors each have
corporate power and authority to enter into this Agreement and to issue, sell
and deliver the Notes and the Guaranties, as the case may be, to the
Underwriters as provided herein, and this Agreement has been duly authorized,
executed and delivered by the Company and each of the Guarantors, and is a
valid, legal and binding agreement of the Company and the Guarantors,
enforceable against the Company and the Guarantors in accordance with its
terms, except as enforcement of rights to indemnity and contribution hereunder
may be limited by Federal or state securities laws or principles of public
policy and except as the enforcement hereof may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and subject to the applicability of general
principles of equity;
(vi) The Indenture has been duly and validly
authorized, executed and delivered by the Issuers and, assuming due execution
and delivery by the Trustee, is a valid and binding agreement of the Issuers,
enforceable in accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency or other similar laws affecting creditors'
rights generally, and has been duly qualified under the 1939 Act;
(vii) The Notes have been duly and validly
authorized and executed by the Company and, assuming due authentication of the
Notes by the Trustee, upon delivery to the Underwriters against payment
therefor in accordance with the terms hereof, will have been validly issued and
delivered, and will constitute valid and binding obligations of the Company
entitled to the benefits of the Indenture;
(viii) The Guaranties have been duly and validly
authorized by each of the Guarantors and upon delivery to the Underwriters
against payment therefor in accordance with the terms hereof, will have been
validly issued and delivered, and will constitute valid and binding obligations
of each of the Guarantors entitled to the benefits of the Indenture;
(ix) The Registration Statement and all
post-effective amendments, if any, have become effective under the Act and, to
the best knowledge of such counsel after reasonable inquiry, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose are pending before or contemplated by the
Commission; and any
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required filing of the Prospectus pursuant to Rule 424(b) has been made in
accordance with Rule 424(b);
(x) Neither the Company nor any of the
Subsidiaries is in violation of its respective certificate or articles of
incorporation or bylaws, or other organizational documents, or to the knowledge
of such counsel, is in default in the performance of any material obligation,
agreement or condition contained in any bond, debenture, note or other evidence
of indebtedness, except as may be disclosed in the Prospectus;
(xi) Neither the offer, sale or delivery of the
Notes, the execution, delivery or performance of this Agreement and the
Indenture, compliance by the Issuers with the provisions hereof and thereof,
nor consummation by the Issuers of the transactions contemplated hereby and
thereby, conflicts or will conflict with or constitutes or will constitute a
breach of, or a default under, the certificate or articles of incorporation or
bylaws, or other organizational documents, of the Company or any of the
Subsidiaries or to such counsel's knowledge any material agreement, indenture,
lease or other instrument to which the Company or any of the Subsidiaries is a
party or by which any of them or any of their respective properties is bound,
or will result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of the Subsidiaries, nor will
any such action result in any violation of any existing law, regulation, ruling
(assuming compliance with all applicable state securities and Blue Sky laws),
judgment, injunction, order or decree known to such counsel after reasonable
inquiry, applicable to the Company, the Subsidiaries or any of their respective
properties;
(xii) No consent, approval, authorization or other
order of, or registration or filing with, any court, regulatory body,
administrative agency or other governmental body, agency, or official is
required on the part of the Issuers (except as have been obtained under the
Act, the Exchange Act, the 1939 Act, and such as may be required under state
securities or Blue Sky laws governing the purchase and distribution of the
Notes) for the valid issuance and sale of the Notes to the Underwriters as
contemplated by this Agreement;
(xiii) The Registration Statement and the Prospectus
and any supplements or amendments thereto (except for the financial statements
and the notes thereto and the schedules and other financial and statistical
data or reserve information included therein, as to which such counsel need not
express any opinion) comply as to form in all material respects with the
requirements of the Act; and each of the Incorporated Documents (except for the
financial statements and the notes thereto and the schedules and other
financial and statistical data or reserve information included therein, as to
which counsel need not express any opinion) complies as to form in all material
respects with the Exchange Act and the rules and regulations of the Commission
thereunder;
(xiv) The statements under "Business and
Properties," "Regulation," "Description of the Notes" in the Registration
Statement and Prospectus, insofar as they are descriptions of contracts,
agreements or other legal documents, or refer to statements of law or legal
conclusions, are accurate and present fairly the information required to be
shown;
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(xv) To the knowledge of such counsel, (A) other
than as described or contemplated in the Prospectus (or any supplement
thereto), there are no legal or governmental proceedings pending or threatened
against the Company or any of the Subsidiaries, or to which the Company or any
of the Subsidiaries, or any of their property, is subject, which are required
to be described in the Registration Statement or Prospectus (or any amendment
or supplement thereto) and (B) there are no agreements, contracts, indentures,
leases or other instruments, that are required to be described in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto) or to be filed as an exhibit to the Registration Statement or any
Incorporated Document that are not described or filed as required, as the case
may be;
(xvi) Except as described in the Prospectus, there
is no holder of any security of the Company or any other person who has the
right, contractual or otherwise, to cause the Company to sell or otherwise
issue to them, or to permit them to underwrite the sale of, the Notes or the
right to have any Common Stock or other securities of the Company included in
the registration statement or the right, as a result of the filing of the
registration statement, to require registration under the Act of any shares of
Common Stock or other securities of the Company.
In addition, such counsel shall state that although counsel has not
undertaken, except as otherwise indicated in their opinion, to determine
independently, and does not assume any responsibility for, the accuracy or
completeness of the statements in the Registration Statement, such counsel has
participated in the preparation of the Registration Statement and the
Prospectus, including review and discussion of the contents thereof (including
review and discussion of the contents of all Incorporated Documents) and
relying as to materiality to a large extent upon the analyses, judgments and
opinions of officers and other representatives of the Company, and nothing has
come to the attention of such counsel that has caused them to believe that the
Registration Statement (including the Incorporated Documents) at the time the
Registration Statement became effective, or the Prospectus, as of its date and
as of the Closing Date or the Option Closing Date, as the case may be,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
in light of the circumstances under which they were made, not misleading or
that any amendment or supplement to the Prospectus, as of its respective date,
and as of the Closing Date or the Option Closing Date, as the case may be,
contained any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to the
financial statements and the notes thereto and the schedules and other
financial and statistical data or reserve information included in the
Registration Statement or the Prospectus or any Incorporated Document).
In rendering their opinion as aforesaid, counsel may rely upon an
opinion or opinions, each dated the Closing Date, of other counsel retained by
them or the Company as to laws of any jurisdiction other than the United States
or the States of Texas and Delaware, provided that (1) each such local counsel
is acceptable to the Representatives, (2) such reliance is expressly authorized
by each opinion so relied upon and a copy of each such opinion is delivered to
the Representatives and
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is, in form and substance satisfactory to them and their counsel, and (3)
counsel shall state in their opinion that they believe that they and the
Underwriters are justified in relying thereon.
(d) You shall have received on the Closing Date an opinion of
Xxxxxx & Xxxxxx L.L.P., counsel for the Underwriters, dated the Closing Date
and addressed to you, as Representatives of the several Underwriters, with
respect to such matters as the Underwriters may request.
(e) You shall have received letters addressed to you, as
Representatives of the several Underwriters, and dated the date hereof and the
Closing Date from Xxxxxx Xxxxxxxx L.L.P., independent certified public
accountants, substantially in the forms heretofore approved by you.
(f) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there
shall not have been any change in the capital stock of the Company nor any
material increase in the short-term or long-term debt of the Company (other
than in the ordinary course of business) from that set forth or contemplated in
the Registration Statement or the Prospectus (or any amendment or Supplement
thereto); (iii) there shall not have been, since the respective dates as of
which information is given in the Registration Statement and the Prospectus (or
any amendment or supplement thereto), except as may otherwise be stated in the
Registration Statement and Prospectus (or any amendment or supplement thereto),
any material adverse change in the condition (financial or other), business,
prospects, properties, net worth or results of operations of the Company and
the Subsidiaries taken as a whole; (iv) the Company and the Subsidiaries shall
not have any liabilities or obligations, direct or contingent (whether or not
in the ordinary course of business), that are material to the Company and the
Subsidiaries, taken as a whole, other than those reflected in the Registration
Statement or the Prospectus (or any amendment or supplement thereto); and (v)
all the representations and warranties of the Company contained in this
Agreement shall be true and correct on and as of the date hereof and on and as
of the Closing Date as if made on and as of the Closing Date, and you shall
have received a certificate, dated the Closing Date and signed by the chief
executive officer and the chief financial officer of the Company (or such other
officers as are acceptable to you), to the effect set forth in this Section
8(g) and in Section 8(h) hereof.
(g) The Company shall not have failed at or prior to the Closing
Date to have performed or complied with any of its agreements herein contained
and required to be performed or complied with by it hereunder at or prior to
the Closing Date.
(h) There shall not have been any announcement by any "nationally
recognized statistical rating organization", as defined for purposes of Rule
436(g) under the Act, that (i) it is downgrading its rating assigned to any
class of securities of the Company, or (ii) it is reviewing its rating assigned
to any class of securities of the Company with a view to possible downgrading,
or with negative implications, or direction not determined.
(i) The Notes shall have been listed, subject to notice of
issuance, on the New York Stock Exchange.
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(j) The Company shall have furnished or caused to be furnished to
you such further certificates and documents as you shall have reasonably
requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to you and your counsel.
Any certificate or document signed by any officer of an Issuer and
delivered to you, as Representatives of the Underwriters, or to counsel for the
Underwriters, shall be deemed a representation and warranty by the Issuers to
each Underwriter as to the statements made therein.
9. Expenses. Whether or not the purchase and sale of the Notes
hereunder is consummated or this Agreement is terminated pursuant to Section 11
hereof, the Issuers agree, jointly and severally, to pay the following costs
and expenses and all other costs and expenses incident to the performance by it
of its obligations hereunder: (i) the preparation, printing (or reproduction),
and filing with the Commission of the registration statement (including
financial statements and exhibits thereto), each Prepricing Prospectus, the
Prospectus, each amendment or supplement to any of them, this Agreement, the
Indenture and the Statement of Eligibility and Qualification of the Trustee;
(ii) the printing (or reproduction) and delivery (including postage, air
freight charges and charges for counting and packaging) of such copies of the
registration statement, each Prepricing Prospectus, the Prospectus, the
Incorporated Documents, and all amendments or supplements to any of them, as
may be reasonably requested for use in connection with the offering and sale of
the Notes; (iii) the preparation, printing (or reproduction), execution and
delivery of the Indenture and the preparation, printing, authentication,
issuance and delivery of the Notes, including any stamp taxes in connection
with the original issuance of the Notes; (iv) the printing (or reproduction)
and delivery of this Agreement, the preliminary and supplemental Blue Sky
Memoranda and all other agreements or documents printed (or reproduced) and
delivered in connection with the offering of the Notes; (v) the registration of
the Notes under the Exchange Act and the listing of the Notes on the New York
Stock Exchange; (vi) the registration or qualification of the Notes for offer
and sale under the securities or Blue Sky laws of the several states as
provided in Section 5(g) hereof (including the reasonable fees, expenses and
disbursements of counsel for the Underwriters relating to the preparation,
printing (or reproduction), and delivery of the preliminary and supplemental
Blue Sky Memoranda and such registration and qualification); (vii) the filing
fees and the fees and expenses of counsel for the Underwriters in connection
with any filings required to be made with the National Association of
Securities Dealers, Inc.; (viii) the fees and expenses of the Trustee; (ix)
the fees and expenses associated with obtaining ratings for the Notes from
nationally recognized statistical rating organizations; (x) the transportation
and other expenses incurred by or on behalf of Company representatives in
connection with presentations to prospective purchasers of the Notes; and (xi)
the fees and expenses of the Company's accountants and the fees and expenses of
counsel (including local and special counsel) for the Company.
10. Effective Date of Agreement. This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties hereto; or
(ii) if, at the time this Agreement is executed and delivered, it is necessary
for the registration statement or a post-effective amendment thereto to be
declared effective before the offering of the Notes may commence, when
notification
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of the effectiveness of the registration statement or such post-effective
amendment has been released by the Commission. Until such time as this
Agreement shall have become effective, it may be terminated by the Company, by
notifying you, or by you, as Representatives of the several Underwriters, by
notifying the Company.
If any one or more of the Underwriters shall fail or refuse to
purchase Notes which it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate principal amount of Notes which such defaulting
Underwriter or Underwriters are obligated but fail or refuse to purchase is not
more than one-tenth of the aggregate principal amount of Notes which the
Underwriters are obligated to purchase on the Closing Date, each non-defaulting
Underwriter shall be obligated, severally, in the proportion which the
principal amount of Notes set forth opposite its name in Schedule I hereto
bears to the aggregate principal amount of Notes set forth opposite the names
of all non-defaulting Underwriters or in such other proportion as you may
specify in accordance with Section 20 of the Master Agreement Among
Underwriters of Xxxxx Xxxxxx Inc., to purchase the Notes which such defaulting
Underwriter or Underwriters are obligated, but fail or refuse, to purchase. If
any one or more of the Underwriters shall fail or refuse to purchase Notes
which it or they are obligated to purchase on the Closing Date and the
aggregate principal amount of Notes with respect to which such default occurs
is more than one-tenth of the aggregate principal amount of Notes which the
Underwriters are obligated to purchase on the Closing Date and arrangements
satisfactory to you and the Issuers for the purchase of such Notes by one or
more non-defaulting Underwriters or other party or parties approved by you and
the Issuers are not made within 36 hours after such default, this Agreement
will terminate without liability on the part of any non-defaulting Underwriter
or the Issuers. In any such case which does not result in termination of this
Agreement, either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or
any other documents or arrangements may be effected. Any action taken under
this paragraph shall not relieve any defaulting Underwriter from liability in
respect of any such default of any such Underwriter under this Agreement. The
term "Underwriter" as used in this Agreement includes, for all purposes of this
Agreement, any party not listed in Schedule I hereto who, with your approval
and the approval of the Issuers, purchases Notes which a defaulting Underwriter
is obligated, but fails or refuses, to purchase.
Any notice under this Section 10 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
11. Termination of Agreement. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Underwriter to the Issuers by notice to the Issuers, if prior to the Closing
Date, as the case may be, (i) trading in the Common Stock of the Company shall
be suspended or subject to any restriction or limitation not in effect on the
date of this Agreement; (ii) trading in securities generally on the New York
Stock Exchange, the American Stock Exchange or the Nasdaq National Market shall
have been suspended or materially limited, (iii) a general moratorium on
commercial banking activities in New York or New Jersey shall have been
declared by either federal or state authorities, or (iv) there shall have
occurred any outbreak or escalation of hostilities or other international or
domestic calamity, crisis or change in political,
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financial or economic conditions, the effect of which on the financial markets
of the United States is such as to make it, in your judgment, impracticable or
inadvisable to commence or continue the offering of the Notes on the terms set
forth on the cover page of the Prospectus or to enforce contracts for the
resale of the Notes by the Underwriters.
Notice of such termination may be given by telegram, telecopy or
telephone and shall be subsequently confirmed by letter.
12. Information Furnished by the Underwriters. The statements set
forth in the last paragraph on the cover page, the stabilization legend on the
inside cover page, and the statements in the first, third and fourth paragraphs
under the caption "Underwriting" in any Prepricing Prospectus and in the
Prospectus, constitute the only information furnished by or on behalf of the
Underwriters through you as such information is referred to in Sections 6(b)
and 7 hereof.
13. Miscellaneous. Except as otherwise provided in Sections 5, 10
and 11 hereof, notice given pursuant to any provision of this Agreement shall
be in writing and shall be delivered (i) if to the Issuers, at the office of
the Company at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxx 00000, Attention: Xxxxx
X. Christmas, Chief Executive Officer; or (ii) if to you, as Representatives of
the several Underwriters, care of Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Manager, Investment Banking Division.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Issuers, their respective directors and officers, and
the other controlling persons referred to in Section 7 hereof and their
respective successors and assigns, to the extent provided herein, and no other
person shall acquire or have any right under or by virtue of this Agreement.
Neither the term "successor" nor the term "successors and assigns" as used in
this Agreement shall include a purchaser from any Underwriter of any of the
Notes in his status as such purchaser.
14. Applicable Law; Counterparts. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
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Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
KCS ENERGY, INC.
ENERCORP GAS MARKETING, INC.
KCS RESOURCES, INC.
KCS MICHIGAN RESOURCES, INC.
KCS PIPELINE SYSTEMS, INC.
KCS ENERGY MARKETING, INC.
KCS ENERGY SERVICES, INC.
KCS MEDALLION RESOURCES, INC.
NATIONAL ENERDRILL CORPORATION
PROLIQ, INC.
MEDALLION CALIFORNIA PROPERTIES CO.
MEDALLION GAS SERVICES, INC.
By:
----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
Underwriters named in Schedule I hereto.
SALOMON BROTHERS INC
PRUDENTIAL SECURITIES INC.
CIBC XXXXXXXXXXX SECURITIES CORP.
XXXXXXXXX AND COMPANY, INC.
XXXXXX XXXXXX & COMPANY, INC.
As Representatives of the Several Underwriters
By: SALOMON BROTHERS INC
By:
---------------------------
Managing Director
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SCHEDULE I
KCS ENERGY, INC.
PRINCIPAL AMOUNT OF
UNDERWRITER NOTES
----------------------------------------------------------------------------- -------------------
Salomon Brothers Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prudential Securities Inc. . . . . . . . . . . . . . . . . . . . . . . . . .
CIBC Xxxxxxxxxxx Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Xxxxxxxxx and Company, Inc. . . . . . . . . . . . . . . . . . . . . . . . . .
Xxxxxx Xxxxxx & Company, Inc. . . . . . . . . . . . . . . . . . . . . . . . .
------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $125,000,000
============
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